CYPHERPUNK TECHNOLOGIES INC.

Previous wording

Our lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. We are currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. Our second clinical stage program is FL-301, a monoclonal antibody that targets cells that express Claudin18.2 on their cell surface. We also have two preclinical antibody programs, FL-302 and FL-501.

Current wording

Our lead clinical stage program is sirexatamab (DKN-01), a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. We are currently studying sirexatamab in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. We also have a preclinical antibody program FL-501.

Previous wording

We have incurred net losses in each year since our inception in 2011. Our net loss was $81.4 million for the year ended December 31, 2023 and $54.6 million for the year ended December 31, 2022. As of December 31, 2023, we had an accumulated deficit of approximately $399.6 million. Our net losses have resulted primarily from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and have operating losses for at least the next several years as we:

Current wording

We have incurred net losses in each year since our inception in 2011. Our net loss was $67.6 million for the year ended December 31, 2024 and $81.4 million for the year ended December 31, 2023. As of December 31, 2024, we had an accumulated deficit of approximately $467.4 million. Our net losses have resulted primarily from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and have operating losses for at least the next several years as we:

Previous wording

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the commercialization of DKN-01 or any other product candidate. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our operating activities through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our product candidates.

Current wording

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the commercialization of sirexatamab or any other product candidate. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our operating activities through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our product candidates, and could force us to significantly limit or reduce the scope of our business, operations and activities, or to sell ourselves or engage in some other strategic transaction at an unfavorable price and on other unfavorable terms, or to discontinue our business and operations entirely, wind-up and liquidate.

Previous wording

As of December 31, 2023, we had cash and cash equivalents of $70.6 million. We believe that our cash and cash equivalents as of December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the filing of this Annual Report on Form 10-K. See “—Liquidity and Capital Resources.”

Current wording

As of December 31, 2024, we had cash and cash equivalents of $47.2 million. We believe that our cash and cash equivalents as of December 31, 2024 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the filing of this Annual Report on Form 10-K. See “—Liquidity and Capital Resources.”

Previous wording

Our research and development activities have included conducting nonclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates, primarily DKN-01. We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

Current wording

Our research and development activities have included conducting nonclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates, primarily sirexatamab. We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

Previous wording

We plan to increase our research and development expenses for the foreseeable future as we continue the development of DKN-01 and any other product candidates, subject to the availability of additional funding.

Current wording

We plan to increase our research and development expenses for the foreseeable future as we continue the development of sirexatamab and any other product candidates, subject to the availability of additional funding.

Previous wording

Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year, due to our uncertainty of realizing a benefit from those items. As of December 31, 2023, we had federal and state net operating loss (“NOL”) carryforwards of $17.5 million and $18.5 million, respectively. The federal NOL’s are indefinitely lived and state NOL’s begin to expire in 2038.

Current wording

Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year, due to our uncertainty of realizing a benefit from those items. As of December 31, 2024, we had federal and state net operating loss (“NOL”) carryforwards of $42.2 million and $47.2 million, respectively. The federal NOL’s are indefinitely lived and state NOL’s begin to expire in 2032.

Previous wording

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have completed a study to assess whether an ownership change occurred or whether there were multiple ownership changes since we became a “loss corporation” as defined in Section 382. We experienced multiple ownership changes occurring in 2019, 2020, and 2023. The ownership changes have and will continue to subject our pre-ownership change NOL carryforwards to an annual limitation, which will significantly restrict our ability to use them to offset taxable income in periods following the ownership changes. In general, the annual use limitation equals the aggregate value of our stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. As a result of the ownership changes, we are limited to a $0.0 million annual limitation on our ability to utilize our NOL’s and R&D credits recognized prior to the Flame merger. Due to this limitation, approximately $210.8 million of the federal NOL’s and $7.9 million of federal R&D credits will expire unutilized. Additionally, approximately $192.7 million and $1.8 million, respectively, of state NOL’s and R&D tax credits will expire unutilized. As a result, we have reduced our deferred tax assets related to the federal and state NOL’s and R&D credits which are offset by the corresponding decrease in the valuation allowance.

Current wording

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have completed a study to assess whether an ownership change occurred or whether there were multiple ownership changes since we became a “loss corporation” as defined in Section 382. We experienced multiple ownership changes occurring in 2019, 2020, and 2023. The ownership changes have and will continue to subject our pre-ownership change NOL carryforwards to an annual limitation, which will significantly restrict our ability to use them to offset taxable income in periods following the ownership changes. In general, the annual use limitation equals the aggregate value of our stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. As a result of the ownership changes, we are limited to a $0.0 million annual limitation on our ability to utilize our NOL’s and R&D credits recognized prior to the Flame merger. Due to this limitation, approximately $210.7 million of the federal NOL’s and $7.8 million of federal R&D credits will expire unutilized. Additionally, approximately $192.2 million and $1.8 million, respectively, of state NOL’s and R&D tax credits will expire unutilized. As a result, we have reduced our deferred tax assets related to the federal and state NOL’s and R&D credits which are offset by the corresponding decrease in the valuation allowance.

Previous wording

As of December 31, 2023, we also had federal and state R&D tax credits of $1.5 million and $0.2 million, respectively, which begin to expire in 2030.

Current wording

As of December 31, 2024, we also had federal and state R&D tax credits of $3.0 million and $0.6 million, respectively, which begin to expire in 2043 and 2038, respectively, for federal and state tax purposes.

Previous wording

There is no provision for income taxes in the United States because we have historically incurred operating losses and maintain a full valuation allowance against our deferred tax assets in these jurisdictions.

Current wording

There is no provision for income taxes in the United States because we have historically incurred operating losses and maintain a full valuation allowance against our deferred tax assets in these jurisdictions. A provision for income taxes was recorded in Australia based on the results of our foreign subsidiary.

Previous wording

As part of the process of preparing consolidated financial statements, we are required to estimate accrued research and development expenses. This process involves communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly for services performed. We make estimates of our accrued research and development expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us. We periodically confirm the accuracy of our estimates with selected service providers and make adjustments, if necessary. To date, we have not adjusted our estimate at any particular balance sheet date by any material amount. Examples of estimated accrued research and development expenses include:

Current wording

As part of the process of preparing consolidated financial statements, we are required to account for research and development expenses. This process involves communicating with our applicable personnel and service providers to identify services that have been performed on our behalf and the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly for services performed. We accrue for our research and development expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us. We periodically confirm the accuracy of the data that we use to accrue for research and development expenses with selected service providers and make adjustments, if necessary. To date, we have not adjusted our accruals at any particular balance sheet date by any material amount. Examples of accrued research and development expenses include:

Previous wording

We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If we do not accurately identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates.

Current wording

We base our expenses related to clinical trials on the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. If we do not accurately identify costs that we have incurred, our actual expenses could differ from our accruals.

Previous wording

Research and development expenses were $73.2 million for the year ended December 31, 2023, compared to $45.0 million for the year ended December 31, 2022. The increase of $28.2 million in research and development expenses was primarily due to $29.6 million of in-process research and development (“IPR&D”) acquired in the Flame merger which we expensed during the year ended December 31, 2023, as we concluded that the IPR&D acquired did not have an alternative future use. There was also an increase of $3.8 million in clinical trial costs due to patient enrollment and the duration of patients on study, an increase of $3.0 million in payroll and other related expenses due to an increase in headcount of our research and development full-time employees and an increase of $0.1 million in stock-based compensation expense due to new stock options granted to employees during the year ended December 31, 2023. These increases were partially offset by a decrease of $8.1 million in manufacturing costs related to clinical trial material due to timing of manufacturing campaigns and a decrease of $0.2 million in consulting fees associated with research and development activities.

Current wording

Research and development expenses were $57.2 million for the year ended December 31, 2024, compared to $73.2 million for the year ended December 31, 2023. The decrease of $16.0 million in research and development expenses was primarily due to $29.6 million of in-process research and development (“IPR&D”) acquired in the Flame merger which we expensed during the year ended December 31, 2023, as we concluded that the IPR&D acquired did not have an alternative future use. This decrease was partially offset by an increase of $8.8 million in clinical trial costs due to due to patient enrollment, the duration of patients on study, the enhancement of correlative studies, the increase in site activity associated with Part C of the DisTinGuish study, and the expansion of the size of Part B of the DeFianCe study. There was also an increase of $2.8 million in manufacturing costs related to clinical trial material due to timing of manufacturing campaigns, an increase of $1.6 million in payroll and other related expenses due to an increase in headcount of our research and development full-time employees, an increase of $0.2 million in stock based compensation expense due to new stock options granted to employees during the year ended December 31, 2024 and an increase of $0.2 million in consulting fees associated with research and development activities.

Previous wording

General and administrative expenses were $13.8 million for the year ended December 31, 2023, compared to $11.8 million for the year ended December 31, 2022. The increase of $2.0 million was primarily due to an increase of $1.4 million in professional fees due to higher finance and legal costs associated with our business development activities and an increase of $0.8 million in payroll and other related expenses due to an increase in headcount of our general and administrative full-time employees. These increases were partially offset by a decrease in stock-based compensation expense of $0.2 million.

Current wording

General and administrative expenses were $12.8 million for the year ended December 31, 2024, compared to $13.8 million for the year ended December 31, 2023. The decrease of $1.0 million was primarily attributable to a $1.3 million decrease in professional fees due to lower finance and legal costs associated with our business development activities during the year ended December 31, 2024 as compared to the year ended December 31, 2023. This decrease was partially offset by an increase of $0.2 million in stock-based compensation expense due to new stock options granted to employees during the year ended December 31, 2024 and an increase of $0.1 million in payroll and other related expenses.

Previous wording

We recorded interest income of $4.0 million and $0.9 million, respectively, during the years ended December 31, 2023 and 2022. The increase during the year ended December 31, 2023 as compared to the same period in 2022 was due to higher interest rates earned on interest bearing cash accounts.

Current wording

We recorded interest income of $3.1 million and $4.0 million, respectively, during the years ended December 31, 2024 and 2023. The decrease during the year ended December 31, 2024 as compared to the same period in 2023 was due to a lower average cash and cash equivalents balance.

Previous wording

We recorded R&D incentive income of $1.1 million and $2.1 million for the years ended December 31, 2023 and 2022, respectively, based upon the applicable percentage of eligible research and development activities under the Australian Incentive Program, net of our Australian tax liability, which expenses included the cost of manufacturing of clinical trial material.

Current wording

We recorded R&D incentive income of $1.1 million for the year ended December 31, 2023, based upon the applicable percentage of eligible research and development activities under the Australian Incentive Program, net of our Australian tax liability, which expenses included the cost of manufacturing of clinical trial material. We did not recognize any R&D incentive income during the year ended December 31, 2024.

Previous wording

During the year ended December 31, 2023, we received $2.3 million of research and development tax incentive payments from the Commonwealth of Australia as a result of the 2022 research and development activities. During the year ended December 31, 2022, we received $1.1 million of research and development tax incentive payments from the Commonwealth of Australia as a result of the 2021 research and development activities.

Current wording

During the year ended December 31, 2023, we received $2.3 million of research and development tax incentive payments from the Commonwealth of Australia as a result of the 2022 research and development activities. During the year ended December 31, 2024, we did not receive any research and development tax incentive payments from the Commonwealth of Australia as a result of the 2023 research and development activities. We expect to receive $0.8 million of research and development tax incentive payments during the year ended December 31, 2025 for research and development activities performed during 2023.

Previous wording

We recorded foreign currency losses of $0.6 million for the year ended December 31, 2022. We recorded an immaterial amount of foreign currency losses for the year ended December 31, 2023. The change in foreign currency losses is due to the changes in the Australian dollar exchange rate related to activities of the Australian entity.

Current wording

We recorded an immaterial amount of foreign currency losses for the years ended December 31, 2024 and 2023. The change in foreign currency losses is due to the changes in the Australian dollar exchange rate related to activities of the Australian entity.

Previous wording

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. As of December 31, 2023, we had cash and cash equivalents of $70.6 million. Additionally, we had an accumulated deficit of $399.6 million at December 31, 2023, and during the year ended December 31, 2023, we incurred a net loss of $81.4 million. We expect to continue to generate operating losses in the foreseeable future. We believe that our cash and cash equivalents of $70.6 million as of December 31, 2023, will be sufficient to fund our operating expenses for at least the next 12 months from the issuance of this Annual Report on Form 10-K.

Current wording

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. As of December 31, 2024, we had cash and cash equivalents of $47.2 million. Additionally, we had an accumulated deficit of $467.4 million at December 31, 2024, and during the year ended December 31, 2024, we incurred a net loss of $67.6 million. We expect to continue to generate operating losses in the foreseeable future. We believe that our cash and cash equivalents of $47.2 million as of December 31, 2024, will be sufficient to fund our operating expenses for at least the next 12 months from the issuance of this Annual Report on Form 10-K.

Previous wording

In addition, to support our future operations, we will seek additional funding through public or private equity financings or government programs and will seek funding or development program cost-sharing through collaboration agreements or licenses with larger pharmaceutical or biotechnology companies. If we do not obtain additional funding or development program cost-sharing, we could be forced to delay, reduce or eliminate certain clinical trials or research and development programs, reduce or eliminate discretionary operating expenses, and delay company and pipeline expansion, which could adversely affect our business prospects. The inability to obtain funding, as and when needed, could have a negative impact on Leap’s financial condition and our ability to pursue our business strategies.

Current wording

In addition, to support our future operations, we will seek additional funding through public or private equity financings or government programs and will seek funding or development program cost-sharing through collaboration agreements or licenses with larger pharmaceutical or biotechnology companies. If we do not obtain additional funding or development program cost-sharing, we could be forced to delay, reduce or eliminate certain clinical trials or research and development programs, reduce or eliminate discretionary operating expenses, and delay company and pipeline expansion, which could adversely affect our business prospects. The inability to obtain funding, as and when needed, could have a negative impact on Leap’s financial condition and our ability to pursue our business strategies and could force us to sell ourselves or engage in some other strategic transaction at an unfavorable price and on other unfavorable terms or to discontinue our business and operations entirely, wind-up and liquidate.

Previous wording

Net cash used in operating activities for the year ended December 31, 2022 was primarily related to our net loss of $54.6 million and net changes in working capital, including an increase in research and development receivable of $1.0 million, an increase of $0.8 million in other assets and a decrease in lease liabilities of $0.4 million. These changes were partially offset by an increase in accounts payable and accrued expenses of $0.9 million and a decrease in prepaid expenses and other assets of $0.4 million, decrease in deferred tax assets of $0.2 million, noncash stock-based compensation expense of $5.2 million and noncash lease expense of $0.4 million. There was also a noncash change of $0.6 million due to foreign currency losses.

Current wording

Net cash used in operating activities for the year ended December 31, 2024 was primarily related to our net loss of $67.6 million and net changes in working capital, including a decrease in lease liabilities of $0.4 million. These changes were partially offset by an increase in accounts payable and accrued expenses of $0.9 million, an increase in income tax payable of $0.6 million, a decrease of $0.1 million in prepaid expenses and other assets, a decrease of $0.2 million in other assets, noncash stock-based compensation expense of $5.5 million and change in a right-of-use asset of $0.4 million.

Previous wording

Net cash used in financing activities for the year ended December 31, 2023 primarily consisted of an immaterial amount paid by the Company for the redemption of 10,000 shares of the warrants issued in connection with a public offering in 2019. Net cash used in financing activities for the year ended December 31, 2022 consisted of payments of offering costs of $0.2 million.

Current wording

million of offering costs paid. Net cash used in financing activities for the year ended December 31, 2023 primarily consisted of an immaterial amount paid by the Company for the redemption of 10,000 shares of the warrants issued in connection with a public offering in 2019.

Previous wording

We remain committed to $0.6 million of non-cancellable commitments under manufacturing agreements with vendors to manufacture DKN-01 for use in clinical trials.

Current wording

We remain committed to $0.1 million of non-cancellable commitments under manufacturing agreements with vendors to manufacture DKN-01 for use in clinical trials.